N.C. hospitals sued 7,517 patients, family members over medical debt

Aug. 17—RALEIGH — North Carolina hospitals sued 7,517 patients and their family members to collect medical debt from January 2017 through June 2022, according to a new study jointly authored by Duke Law School faculty and the Office of State Treasurer.

Many of the legal actions resulted in default judgments in state district courts and included awards of 8% interest charges on patients' medical debt. In total, interest charges and other added fees accounted for 35.4% of the $57.3 million in total judgments owed by patients. Nonprofit hospitals were responsible for 90.6% of the 5,922 lawsuits against patients.

State Treasurer Dale R. Folwell cites the study as a new reason to call on the state House of Representatives to pass Senate Bill 321, the Medical Debt De-Weaponization Act. The bill would protect patients and their families by capping interest in medical debt collection, requiring more transparency in medical bills and providing patients with additional consumer protections, the treasurer said.

The Senate unanimously passed the bill despite opposition from hospital lobbyists.

"This is tantamount to elder abuse," said Folwell. "Hospitals are supposed to care for patients, not overcharge them, sue them and take their homes. These hospitals are destroying the upward mobility of whole families, hurting cancer patients' recovery, and creating intergenerational poverty. They must be stopped."

Folwell was joined by Duke University Law School professors Barak Richman and Sara Sternberg Greene during a press conference Wednesday to release the study, along with a collection of patient interviews independently conducted by the Office of the State Treasurer.

The study found that five hospital systems — Atrium Health, Caromont Health, Sampson Regional Medical Center, Community Health Systems and Mission Health — were responsible for filing 96.5% of the 5,922 lawsuits against patients, and that the state was home to eight "litigious hospitals," defined by the authors as systems that brought more than 40 lawsuits during the 4.5-year sample.

Patient interviews revealed that having health insurance was not enough to protect them from lawsuits, and some patients did not even know they had been sued. One 80-year-old couple did not know about a $90,000 lien against their house until they were contacted by state treasurer's office researchers. Another 70-year-old couple cannot retire because Atrium Health has a $192,000 lien against their house, despite earlier assurances of help with the bills.

"We see a system that fails to deliver due process from start to finish," Richman said. "Patients are charged inflated prices that they neither see nor assent to pay, they get sued in a process that delivers default judgments, and they suffer immediate penalties such as interest payments and liens against homes. Some of these patients never knew they were being sued in the first place."

In North Carolina, medical debt judgments can last up to 20 years, and judgments can automatically act as liens against patients' homes. The study revealed that hospitals won default judgments across a majority of the cases filed in district court. Patients reported that even when they did try to fight the lawsuits, they lacked the information needed to understand the hospital bills.

"By suing some of their most vulnerable patients, hospitals exacerbate long-standing racial wealth inequalities," said Greene. "Black families have only one-tenth of the wealth of white families, making it difficult to pay for unexpected medical bills. These lawsuits are extracting patients' intergenerational wealth through liens on their homes and steep interest charges."

"Many of these hospitals are overcharging patients. These patients couldn't see the price, but they get sued anyway," said Folwell. "This is a continuation of the transfer of wealth from sick people to multi-billion-dollar nonprofits and their multi-million-dollar executives."